Howto Fix the Broken Culture of Volkswagen

by Tom Hinton

Volkswagen, which has admitted to installing software to cheat emissions tests on 11 million diesel vehicles, is the latest example of a company tarnished by a culture of deceit and heavy-handed leadership that placed unreasonable demands on its people. As a result, the giant auto company is facing criminal investigations around the world and an internal crisis that threatens its future stability and marketplace dominance.

Their CEO is out. Martin Winterkorn, who oversaw VW for several years, apparently was an overbearing and unreasonably demanding boss who didn't like failure and put undo pressure on his managers to succeed. In turn, they resorted to cheating the system and breaking all the rules of fair play. It will cost VW dearly. 

There's an old Russian axiom, "A fish stinks from the head down." With Volkswagen, it appears the company's culture of deceit and deception ran all the way to the top. Several former managers in the VW group - whose brands also include Audi, Porsche, SEAT and Skoda - have stated few executives dared approach Winterkorn. He was bull-headed, unreasonable and uncompromising. These are traits of an insecure leader and a recipe for disaster -- which is exactly what VW has on its hands!

According to news reports, Volkswagen has declined to comment on whether the firm's culture or the management style of Winterkorn, who resigned last month, had been a factor in the emissions cheating scandal. But, Winterkorn's ouster presents a unique opportunity for Volkswagen to polish its image and refine its once-proud culture -- a culture based on integrity, fairness and open communication with senior management.

It seems some senior executives at Volkswagen get this message. The question is: Will they act and do the right thing to restore Volkswagen's brand and reputation?

Bernd Osterloh, a member of VW's supervisory board, told employees in an open letter: "This company has to bloody learn and use this opportunity in order to get their act together, and 600,000 people worldwide have to be managed in a different way," he said. "This is very, very clear. We need in future a climate in which problems aren't hidden but can be openly communicated to superiors,"

So what steps can Volkswagen take to restore its reputation?

1. Clean out the senior management (including many of the board members) that represents a corrupt culture and replace them with capable managers who are fair, just and will not tolerate deceit and deception.

2.  Give greater power to the company's two boards.  All German companies have two boards: the management board, led by the chief executive, runs the business day-to-day. The second board is the supervisory board, to which the CEO reports. The supervisory board can hire and fire management board members and must sign-off on major strategic decisions.

3.  Make Amends.  As a company, Volkswagen has lost the trust of thousands of car owners and millions of potential car buyers. Why trust a company that cheats and lies? So, VW must make amends. Changing its leadership is one step. But, offering compensation and fair deals to any customer who wants to trade in their diesel vehicle for a different one must be part of the equation. VW must also establish some kind of institute within its company that fosters education and training for all employees and suppliers on key subjects including open communication, leadership and the values and principles that made VW a once-great company.

About the Author: Tom Hinton is the co-author of the forthcoming book, The Heart & Soul of Culture: How to Align Your Culture to Your Brand.  He can be reached at: tom@tomhinton.com

The Return of Corporate Culture

After several years of being relegated to the sidelines, companies are once again paying attention to the significance of their corporate culture. Culture was a hot topic among CEOs and leading consultants in the early 2000s, but it slipped off the radar screen as wild profits and social media ballooned with the new millennium.

But, ironically, culture has returned thanks to auditors and regulators who have discovered that culture matters. In fact, a company’s culture has proven to be a reliable indicator of the company’s vulnerability in terms of risks, employee turnover, compliance complications and legal entanglements. At the same time, auditors and regulators are finding that companies that operate with a high performance culture have fewer risks and regulatory concerns because they have developed a balanced among their business operations, profit strategies and customer relationships.

And so, culture is making a strong comeback and once again occupying an important seat in the C-suite.

What is “culture,” and what aspects of culture should a company focus on?  We define Corporate Culture as “the blending of your company’s history, heritage, standards, values and attitudes with the experiences of your customers and employees.” Because your corporate culture impacts performance and profitability, it is much more than a simple behavioral model that evaluates the norms and expectations of employees and how they perform their work and interact with customers.

With regard to what you should focus on in terms of refining your corporate culture, we emphasize three areas. We refer to this as your Triad of Business Success™.  The three legs are your Business Operations, Profit Strategies and Customer Relations. For more information on each of these key areas, please visit: www.CRIGlobalCAPS.com 

As you look at your performance history and profit strategies it’s important to recognize that culture plays a significant role in your bottom line.

About the Author. Tom Hinton is president of CRI Global CAPS, an international consulting firm based in San Diego, CA that focuses on helping its clients design and implement culture assessments and performance systems. He can be reached at: tom@CRIGlobal.com

Employee Engagement Requires Engaged Leaders

Over the past 20 years, I've taught thousands of managers and supervisors how to improve their interactions, strengthen communication and build better relationships with employees. Honestly, it’s been an uphill struggle. Why? 

Well, the fact is most companies aren't invested in their people. They give them a job to do, a paycheck and then they expect them to show-up at work and perform the job to the best of their ability. The late management guru Dr. Peter Drucker used to challenge his students and audiences by imploring them not to hire just the arms and legs of people, but also employ their brains and hearts because it is the heart and souls of your people that separates ordinary companies from extraordinary companies. I agree.

And, while paying people a competitive wage and providing them a safe, pleasant work environment would seem like a fair proposition, it’s not enough anymore to stay ahead of the competition.  It’s also not enough to keep your employees motivated and committed to the goals of senior management; and, it’s certainly not enough to retain you best-and-brightest talent.

What’s really required of companies – assuming you want to be recognized as an industry leader or best-in-class organization – is to help your people discover their passion. You see, people who are passionate about their jobs bring an entirely different mindset to the workplace.

This level of passion and commitment on the part of employees is what leaders should be creating in the workplace. But, it’s tough because it requires leaders to get outside their comfort zone and move beyond traditional employee engagement practices.  So, how do you achieve that?

Here are three steps to get you started.

1. Acceptance. Leaders need to accept the fact that an employee is only as committed to his/her jobs as the leader is committed to that employee. Once leaders accept this basic premise, a mind shift occurs and leaders change how they relate to employees. That shift requires a leader to respect the employee as a human being who is their equal despite differences in income, title, education and their upbringing. Each person has unique gifts and talents. Remember that regardless of the job, every employee has a life and interests outside the workplace.

2. Celebrate, Recognize and Reward.  The best leaders embrace the Three Musketeers philosophy – “All for one and one for all!” When an employee is part of a team – and feels as though he/she plays a meaningful role on that team -- commitment follows and passions flow. When leaders challenge a team to perform, and recognize a team’s accomplishments, they are strengthening the team’s commitment to the organization. I have always believed that leaders must recognize a team, but also reward individual achievements. 

3. Set the Example.  Most leaders are good at setting goals and establishing expectations. But, frankly, very few leaders set the example or lead the way down unchartered paths so their teams can follow.  Best-in-class organizations have inspirational leaders who are not afraid to strap on a backpack and walk the journey with their people. Remember, your people are human. They want to see the human side of their leaders as well. No one expects perfection, and no one expects the leader to have all the answers. However, your people do expect the leader to somehow find the answers and show them the way.

This is how meaningful employee engagement happens. It requires passion, involvement and a commitment on the part of leaders. When employees see these attributes in their leaders, they too will be inspired, engaged, committed and passionate about their job.

The CEO is also the Chief Wellness Officer

There's no question that the chief executive officer has many important responsibilities.  But, one of those responsibilities that is becoming more important to the productivity and profitability of your organization is the role of chief wellness officer.

What exactly is a chief wellness officer? The 10,000 Days Foundation defines a chief wellness officer as the individual who is responsible for the personal growth and professional engagement of employees in the workplace. It requires leadership and skill.

We are not talking about the health and physical wellness of employees although that's important. Rather, a chief wellness officer is concerned with the mental and spiritual development of employees because these are the two areas that influence a person's productivity, commitment to their job, teamwork and adherence to the core values of your organization. It's so much more than training or human resources. It's really about rejuvenation and reconnecting people to the workplace.

During The 10,000 Days Foundation's Life Balance Retreats, we emphasize the importance of commitment to the workplace because a person's legacy is often defined by their work and career. For someone to have a rewarding career and work experience is critical to the individual's sense of pride, self-worth, and shaping their legacy.

A disturbing statistic recently cited by the Gallup organization is that 8 out of 10 people are unhappy with their jobs. If this statement is accurate, it speaks to the uphill challenge many CEOs face in trying to re-energize and rejuvenate their employees to be more productive and more committed to the core values and goals of the organization.

While there is no single remedy, The 10,000 Days Foundation has experienced a high degree of success in helping managers and employees, who feel under-appreciated at work -- especially those over 50 years old -- find ways to rediscover the joy of work and have a rewarding and satisfying career.  After all, life is about so much more than simply one's work or job title. 

While work is very important, the most productive employees are those who have created balance in their lives by addressing the eight elements represented in our "Wheel of Life" assessment. Those eight elements are: Environment, Relationships, Wellness, Career, Romance, Fun & Recreation, Money and Legacy. 

This is what we focus on during our Life Balance Retreats. In the process, we help attendees discover what's really important to them and how to set realistic goals to achieve their desired outcomes.

The CEO cannot do it all. He or she needs a talented team of professionals -- internally and externally -- who can help them advance their vision, reinforce their core values, and re-engage their employees so the organization is successful and the employees are fulfilled.

The 10,000 Days Life Balance Retreats are one powerful tool a chief wellness officer can use to create more productive and committed employees.

For more information, visit our website at: www.LifeBalanceRetreat.com